♪ >> there is another woman i have to thank, thank you governor palin for your endorsement them not tea par candidates ups that republicans. >> why did he mislead voters about her college education. how come it took her two decades to pay her college bills? how did she make a living? >> they want to all these middle-class tax-cut hostage until they get an additional tax cut for the wealthiest 2% of americans. >> the president faces the republicans on tax cuts and he also names elizabeth warren to help the new consumer financial protection bureau.

thank you for joining us. i am in for gordon peterson who is off this week. we'll start with the primary elections topped by the christine o'donnell victory over mike castle for the senate nomination in delaware. she won with the backing of sarah palin and the south carolina governor and rush limbaugh and sean hannity. how do you feel three days later? >> all buckley always said to support the most right-wing candidate that is a delectable. i think they broke that rule and it could cost republicans control of the senate. >> it looks like we have this

anger we have been talking about and this looks like a temper tantrum that ran amok. there have been some tea party candidates that have been nominated and have sent a message and made a statement and can win and compete in the fall. in this case, she was going to have to run against the democratic party and much of the republican party as well. >> in addition to the buckley rule, ronald reagan also had an 11th commandment which is not talk badly of another republican in public. they have a lot to say about christine o'donnell. the republicans south carolina senator said he has been in races with republicans who have no principles. >> ronald reagan had a 80% rule

which someone who is with us 80% of the time is our friend and ally. that seems to be the prevailing attitude. >> goodbye bipartisanship. the death of the modern republican is a very sad thing because it kisses goodbye a chance of meaningful compromise in congress. without that, nothing will happen. >> what was fascinating to watch is that on tuesday night most people agreed that this is somebody who won and does not have a chance and they are not going to spend a lot of money. as the week went on, all of a sudden previously hostile republicans discovered the virtues in christie now donald. >> i think that was made by her mother. >> that is not unusual. you g a candidate, republican

or democratic and two wins the nomination who is not your favorite and if the prize is to control the senate, you will discover her virtues quickly. what is important here is that you have a mark rubio in florida, a miller in alaska. christianne o'donnell is a long shot but that is all you have right now. you will go for all the seats that you can possibly get in the senate. >> in addition to them recognizing that they needed to make a majority, i think fear is a factor. i think they reacted initially with their own guts and end status and band they got pushed back. they cannot enter the tea party base which is every one of them -- which puts every one of them in jeopardy. you saw the election night talk which was that they will not

spend one dime on our race. they said there would be no money out of washington and within 48 hours, john cornyn had backed off and said she will get the allotment that everyone else does. they have to be careful about how they react and how they interact with this tea party base. . they have demonstrated that they have the upper hand right now, not washington. >> in addition to the tea party, on election day i was in delaware covering the race and the rush limbaugh radio show slammed mike castle by suggesting that he had voted to impeach george bush by voting to send the mps and resolution by dennis kucinich to the committee where it was intended to die. rush limbaugh and the tea party is pretty dangerous stop them he took a shot -- sarah palin took a shotthththe buckley wrote.

>> they said two boats for the most conservative person in the race, don't qualify that. there is a battle between the rush limbaughs and the sarah palins and the shawn hannitys and the other side. >> when my liberal colleagues agree with me, i get alarmed. if this were an isolated race, republicans were going to end up in the minority or have a large majority, who would represent the lower and you want to take a shot at a tea party can the bike, that is fine. at issue here is a will be in charge of the senate judiciary committee, charles schumer or orrin hatch? that is what is at stake here. that is why there was such anxiety.

it is another chance to stop the obama revolution. if they jeopardized because one candidate is not as conservative as another is a tactical mistake. >> there is an interest in ideological purity that the tea party has been through the debate and they will not tolerate anyone who is not sharing the line with them. >> who should win in delaware? >> i don't know but i think this is a true tidal wave here. she is kind of perky and cute and people like that. she had the sarah palin thing going for so i don't that it is impossible for her to win. you could still get a republican senate. >> some critics say the tea

party decides what qualifies a real republican, next.

>> the tea party is the republican party. >> what happened in delaware just sent a message that there is no room at all for that kind of moderation and independence and the republican party. >> that is the maryland democratic candidate and james carville. is the only place you are going to find bipartisanship in the dictionary? >> i guess so. congress cannot just do not think it we have big problems coming down the pike. some are getting ready to run in

2012. republicans are terrified about the tea party but to do nothing, i don't think that is possible. there is an opportunity in all this to do something constructive. instead of attacking the government, let's fix it. let's go back to 1986 in tax reform when you get rid of the deductions and exemptions, you could actually cut the tax rate by a considerable amount and you can get rid of filing for the irs. out of all this negativity, there could be a positive move toward tax simplification and reform. >> interesting idea, but the litmus test for the tea party is tax increases. the elimination will be seen if the rates go lower as a tax increase.

>> out of the question. meritorious yes, but out of the question politically. they have a litmus test that goes into right to life, social conservative issues. they could get rid of the irs. there is no room for compromise. compromise is a bad word as far as they are concerned. >> completely wrong. the tea party has distinguished itself in being almost exclusively about governance, the regional government, taxation, economic issues. it is not about social conservatives. that is what distinguishes it. the other element that is being missed here is that it rose spontaneously as a reaction to an extremely aggressive and ambitious left-liberal administration. instead of attacking tax reform

at the beginning of the administration, that would have gotten bipartisan agreement and great success. this administration decided it wanted a reform of health care which nobody at the time thought was the major issue in a time of economic recession. >> you cannot rewrite the rules. sarah palin did not come to the state of delaware to imports -- to endorse the candidate. >> sarah palin is not tea party. elements of the movement is economic theme. >> they exist as a unit. >> there is an opportunity here for something that is a little counter intuitive. if we go back to what history

shows in 1994, we will have a more conservative congress any way it goes. we don't know if the republicans will run it. it will be more conservative congress. the taxes will be part of the coming debate. if you look at president obama and his wishes for what he wants on his resume for 2012, i think this white house does want spending cuts and deficit reduction on their resume when they run for reelection. in a way, the president might be able to -- the two sides might be able to find common ground here that would benefit both the congress that comes and could still demonstrate that if they can get things done and they are not a bunch of crazies that don't know how to work in washington, they could accomplish some of their goals and reward their constituents and the president could get something on his resume, some conservative credentials which i

think he does want. >> that tea party is too negative. the energy has been about tearing down. people in office cannot just tear things down. they have to do something. >> even if a few of the tea party candidate to win, that does not mean they dominate the republican caucus. the republican caucus would be conservative but it will not be run by the tea party. >> who among us does deserve tax cuts, next.

>> they should definitely get an extension of the tax cuts in 2001-2003. >> president obama and don banner making arguments about what to do about the bush tax cuts set to expire at the end of this year. don behner's commons did not last long. >> it did not and it might have been an opportunity for the white house or democrats to start a dialogue with the other side. instead, the democrats reacted in a knee-jerk way and attacked. they melt -- they may well have missed about. they could have wrapped their arms around john behner and they could have almost gotten there. they could have accepted what he said as a statement and to the start of a negotiation which would have made john behner's

site de more amenable. it could have opened the door to the fight. >> it was fascinating. it gave the white house and opening to split john banner from mitch mcconnell and the other republicans. they just a check -- they just attacked him again. >> that was churlish. he ran away from his own comments so fast. he caved in. you ask what kind of metal is in the minority leader's backbone of the cannot stand up? >> congress should do what ados -- does best, nothing.

if congress does nothing, those tax cuts go away. we need the revenue. it is not great timing but if you return rates to where they were in the 1990's, the economy was doing well, the government desperately needs that revenue. i think gridlock is a good thing that i do you think that will happen? >> you can argue about the $250,000 and above but there seems to be an overwhelming consensus that people under that amount want to retain their bush tax cuts. >> i think there'll be no action until after the elections in a lame duck session. i think you will have an expansion of all the tax cuts. peter orszag was obama's own budget director and he wrote a piece in which he argued that you either keep the mall or let

them all go. he wants them all abolished in two years. speaking as an economist, what will help our economy the most? the tax cuts that affect the rich, so-called, of that half of the small business income in the united states. do you really want a significant hike on those taxes on the biggest engine of hiring in the country at a time of 10% unemployment? peter orszagh says to abolish them and \ two years and he is right. >> in two years, they would be repealed. [inaudible] >> that is the hope that the economy will recover and more money will start coming in to the federal government in other ways and vent this issue will go

away. [inaudible] >> [inaudible] ." two years, this time, at two years the next time. >> there is faith that the one organizing principle against tax cuts -- >> do you think that peter orszag is a republican operative here? >> i think he just gave his opinion. >> on the eve of a presidential election, a republican congress will raise taxes? not a chance. >> not a chance. he wrote a column and "the new york times and got a big bang for his but then got publicity and a lot of attention. that helped him. >> that does not affect whether it is a good idea economically.

>> i think what will happen if they don't extend the tax cuts for the people with more than $250,000, they make the jobs in the economy, don't they? they did a great job for us. >> president obama finds a way to hire a controversial -- consumer advocate, next. everybody i talk to who's seen our tv

says, "what service do you have?" i tell them, "i have verizon fios." and they go out and buy it. [ male announcer ] why settle for cable? now you can switch to fios tv, internet and phone for just $99.99 a month for a year. the fios technician came in, got everything hooked up. and when he left, i had the greatest picture i've ever seen. [ male announcer ] call now and we'll add a special bonus: the fios tv movie package -- 60 premium channels -- plus epix, free for 12 months. and if you don't love fios, you can cancel with no early termination fee. there's no term contract required. i love going home and working on the computer, because fios is so much faster. [ male announcer ] last chance to save. offer ends october 2nd. get fios for just $99.99 a month with no term contract, plus the fios tv movie package, and epix free for 12 months. sitting in front of that screen with that internet blazing away at me... i lost all my hair. [ male announcer ] call 1.877.437.fios. that's 1.877.437.3467. call the verizon center for customers with disabilities at 800-974-6006 tty/v. [ dennis ] i used to have hair!

with the most locations is becoin the dc area,e bank. we figured they could use our help. ♪ down a bit. too much. [ crowd cheering ] [ grunts ] [ garth ] capital one bank. now with the most branches and atms in the dc area. what's in your wallet? >> president obama is tapping elizabeth warren to head up the consumer protection bureau. she will also report to secretary of the treasury tim geithner. why not just name her to head the bureau in a traditional way? because he cannot get her confirmed. the boats are not there for her. >> -- the boats are not there

for her. the votes are not there for her. they are jerry redding this thing because she is in an advisory role. -- they are jerry-rigging this thing because she is in an advisory role you have to have the full authority that comes with the job. that comes with being confirmed by the senate than it undermines the relationship of our branches of government. the president can pick anybody he wants. but then the senate has a say. we have seen the appointments and that sort of thing and presidents have end runs but this is a whole new animal which creates an illegitimate department because if they put a puppet in there, everyone will know that and the senate may not confirm the puppet. the agency that was supposed to be the stalwart for consumers is

under might instantly. i don't understand that if the democrats are so concerned about turnout, why not nominate her? tell the progress is to get up off their catch and get senators to confirm her. >> the imperial presidency [inaudible] when you talk about government this function, our system is so broken that this should be a straightforward thing. she is great, apparently. >> you cannot confirm that have to go through this ridiculous dodge. >> why not make it an issue? wall street despises power. she has said tough things about the economy. >> i expect they know it is a fight they will lose in the senate. and politically. this is just not right.

we have a constitution and we have separation of powers. this is extra-legal. it is very unseemly. if you want to appoint someone to a position that requires approval to the senate, get the approval of the senate. >> that is it for this week. tune in again next time to "inside washington."

hey, ove, i'm gonna need a bank. any ideas? capital one bank. they're everywhere. ♪ yeah, you're right! [ horns honking ] hey, there's one right up the street. [ male announcer ] capital one bank. the most branches and atms in the dc area. what's in your wallet?